GA 421 | What Employees Want with Dan Johnston

89% of frontline talent in these spaces, production, manufacturing, distribution, transportation. 89% of those workers are more likely to stay at a company that they feel encourages and listens to their feedback.

Today I'm excited to welcome Dan Johnson to the show. Now, Dan is the CEO of a software company called Workstep. And the product is really interesting in that it's a really for employers to help them in hiring, but then also retaining. And they're doing this through, you know, through different technology mechanisms, apps and whatnot. And. But what's super interesting to me from a lean perspective is they're really dialed in, obviously to respect for people and trying to, you know, figure out how to, you know, make sure that's a good fit out of the gate to hire the right people. But then once they're on board, how to keep them empowered, how to listen, get their feedback. Towards the end, we talked about how basically they're practicing pdca. These, these folks that are using this, this product, they're getting the feedback, they're taking action, countermeasures, whatever you want to call it, seeing how it worked out and continuing it. So it's just, it's PDCA over and over again. So really interesting. And Dan also offered some. Some nice insight into just things like what's going on with the workforce and what the. What do employees really want. And his specialty is in particular with like, warehouses and that type of environment. But he's not limited to that because any company's got people and we're all humans, and so it's. We're all really saying the same thing, even if we are in different industries. And finally, towards the end, Dan shared a case study of a company called nfi. And come to find out this is the same NFI that we featured in a Gemba Academy live episode many years ago over in Chino Hills, California. Come to find out they're a user of this particular software, but they are also very, very into lean and continuous improvement. So it's a small world. So maybe we'll link to that Gemba Academy live episode in the show notes so folks can go check that one out. Well, maybe I'll turn a few videos on so they're not behind the paywall there and you can, you can watch a few of those. Okay, so show notes can be found over@gemba podcast.com Just look for episode four. 21. Again, gemba podcast.com look for episode four. Okay, enough for me. Let's get to the show. Dan, welcome to the show. How's it going?

It's going well, Ron. Thanks for having me.

Yeah, man, appreciate you coming on. Where are you calling in from?

I'm in Mill Valley, California, which is just north of the Golden Gate Bridge from San Francisco.

Oh, okay. Beautiful part of the country. Awesome, awesome. Yeah.

Where are you today, Ron?

I'm in Texas. Yeah, we're in Dallas, Fort Worth area of Texas. So one of my business partners, Kevin, he lives in California, he's in the northern part, Morro Bay, way up at the top there. All the fancy wine people, you know.

Yeah, no, beautiful part of their country.

Yeah, it sure is. It sure is. Cool. Well, hey, man, we do like to get the show started with our guests sharing a quote. So do you have one? A favorite quote?

Yeah, I certainly do. Happy to share.

Okay, what do you got?

So one of my favorite quotes is that a leader is best known when people barely know he or she exists. When his work is done, his aim fulfilled, they will say, we did it ourselves. Which is a very old quote. But I think it just really speaks to that sort of leading from the side or, you know, leading from behind, even sort of mentality of the best leaders I know, which is it's really about empowering your people to achieve great things on their own and being there to support them along the way.

Yeah, 100%. I love it. All right, well, hey, tell us a little bit about yourself, Dan. Tell us about your background and, and then how you first got in involved in your line of work and then tell us what your company work up to.

Yeah, sure thing. So my background, I started my career as a warehouse manager. I managed a third party logistics warehouse just outside of Portland, Oregon. Of all things, we imported trampolines from China via the port of Portland and shipped them to DCs and E commerce orders throughout the country. So that's, that's where my journey to work step started. Really in that experience, I saw just how detrimental the legacy temp staffing model was to workers in the industrial sector, just how much that model contributed to the turnover within our workforce and really how hard it was for a frontline worker to grow their career when they were merely sort of being temped out from an agency to an individual company operating manufacturing or logistics environment. Now over time I moved into software, founding a couple of technology companies prior to workstep, and we've been working on workstep for almost five years now. And what we do is we build software solutions that help large companies better hire and most importantly retain their frontline workforce across the Supply chain.

Got it. Got it. So I'm curious because I was poking around on your website a little bit and so you obviously work, like you said, to hire and then also to retain. Where I suppose it's my bias would be it's better to focus more on getting the hire right than trying to retain someone who didn't really want to be there or something like that. Is that fair or what's the right way to look at that?

I mean, workforce success and workforce retention, really, pre hire and post hire processes are two sides of the same coin. Right. So you can have the best talent acquisition processes in the world, but if once an employee comes in, their experience doesn't match that bar, or the company doesn't invest in their safety, satisfaction and growth, that talent acquisition process isn't going to matter. And at the same time, if you have the world's best respect for frontline workers and investment in talent management and people development, but you're not able to acquire talent in a very competitive market, you're also going to have challenges running your supply chain. And so what we built at Workstep is an end to end software platform that really connects those two sides of the house so that companies can not only make better fit hires, but also learn what's working and what's not within their frontline workforce to drive better retention over time.

Yeah. So I mean, obviously as we're recording this year in 2022, the, the job, the world is insane in so many ways, but in particular a lot of companies are having a hard time, you know, finding employees and then if they find them, you know, keeping them happy and all the rest of it. I feel like maybe it's always been like this to some extent, but it just feels amplified. I suppose the pandemic obviously played a role in that as well. But are you seeing the same thing as far as like just these last year, couple years just really been challenging.

It's certainly been amplified now. Anybody who's worked in manufacturing distribution in the last decade has seen labor pain points. It wasn't easy to hire and retain skilled manufacturing employees, skilled warehouse employees, truck drivers in 2015-2016-2017-2018. This has been a problem on the mind of executives for years. But I think in 2020, really with the onset of the pandemic, we saw a major change. I think one is we saw this boom of E commerce and this boom of consumer demand that really increased the demand for this frontline supply chain talent. And at the same time we saw less availability of workers as People sat out of the workforce while they worked to better understand how the COVID risk would impact their broader lives or dealt with child care. We saw the highest levels of frontline turnover on record in 2020 and the highest level of quits on record in 2021. And so you've got this case where there is this exponentially growing demand, stagnating supply workforces that are turning over more quickly than they ever have an aging generation that is reaching retirement age within these industrial settings. And for companies, it's really flipped the power dynamic where it used to be that it felt like in a factory or in a warehouse, the company had all or most of the power. And now it feels in many ways like the worker has all or most of the power because there's another company hiring across the street. They could go take on a flexible work job and get paid tomorrow. And. And so that sort of forced every company to think of their frontline workers as what they are, which is this essential part of their success, and really prioritize their health, safety, satisfaction and growth in a way that we haven't seen in the last few decades.

So just generally speaking, if someone asked you, like, what do. What do people, what do employees, team members at some company, what do they really want? And then why aren't their needs always being met? Like, how would you respond to that?

Boy, there are a lot of ways to answer that question. The way that we think about it at Workstep, so we build retention management software. And one part of that software, what it does, is it automates the collection of feedback from these distributed teams. And we're not talking about the software here. And then it correlates that feedback to outcomes. So if a worker said X on their seventh day and then quit on their tenth day versus they said Y on their seventh day and, and did not quit on their tenth day, the software is going to start to correlate these outcomes. And so that it can tell leadership not just where are workers dissatisfied, which matters, but more importantly, what points of dissatisfaction are leading people to quit. And then underneath all of those data sets, we can say for an industry, what are the predictors of turnover? Which points of workforce negative sentiment are driving people to quit? And the answer to that question is quarter after quarter after quarter access to career growth. The companies that build a culture where workers feel like, I can grow my career at Acme Corp. This is a company who is willing to invest in me the way that I invest in them are the companies that see the best retention. And similarly Those workers who begin to get sort of discontent with the opportunities available to them are the most likely to have turnover risk. And that's pretty standard across industry and company. You see that as sort of the number one theme that's driving turnover.

Got it, got it. So talk a little bit more about, I'm curious on how some leader is responding to feedback. Now you guys are using technology and you know, you know, more of an app based type approach. But like anybody, like even if they don't have technology or they don't have your product or some like, what's the best way for these leaders to, you know, receive and then act on that feedback? I mean, optimally you wouldn't even have feedback, right? If you would have this great empowered workforce where everybody loves being there and all the rest of it, you wouldn't have a need to kind of be asking these questions, I suppose. But in the real world there's always, especially in a big giant warehouse or something like that, there's going to be some dissatisfaction here or there, right. So, but what's the best way to respond to it?

So first of all, I think even in an ideal world, everybody, everybody needs feedback. Even if it's just specific positive feedback, things that the company or the leader shouldn't stop doing, that is still very valuable to capture. Right? What we found, and again, there's a little bit more than a million supply chain workers in our current network is that 89% of frontline talent in these spaces, production, manufacturing, distribution, transportation, 89% of those workers are more likely to stay at a company that they feel encourages and listens to their feedback. And so there's really two parts to that. One is, does an organization have the processes in place to capture feedback from their frontline teams at scale? Again, in these industrial environments, you can often see a 100:1 associate to HR ratio at least. Are there strategies and processes in place to ensure that the workers have a voice in terms of what is working for them and not working for them within their place of work? And is that feedback being heard? And now that doesn't mean that every suggestion that I make is acted on. Right? I could say, boy, it'd really be great if we got paid $150 an hour instead of $20 an hour. That doesn't mean that it needs to be actioned, but it does mean that the loop needs to be closed as much as possible. That could be one to one. I appreciate you bringing this feedback. Here is how we're thinking about the challenges you set out it can be one to many. We met with every worker in this building and here are the themes that came up most frequently. Here's how we're going to attempt to address them as a team. But it is creating those avenues for workers to be able to share their voice and their experience from the front lines and then creating the opportunities to close the loop so that it's not just that they're sort of shouting down an empty hallway as much as this is a bidirectional dialogue.

Yeah, that's really interesting. Within the sort of the lean community, one of the artifacts of our movement is in some cases there's like an old school wooden box on the wall, you know, suggestion system and people write their idea and put it into the box and. And then it goes to die. Right. And they never hear anything and how many times where they keep putting ideas in if nobody ever comes back to them. So yeah, you know, it's, it's really similar to what you're talking about at least being. People need to understand they're at least being heard. Right. And yeah, yeah, so no, I get it. That makes a lot of sense. I'm wondering if you could maybe talk about like I know probably can't name companies or maybe you can, I don't know, it may be some case studies where I don't mean for it to be just like a commercial for your product, but just more of a success story of how somebody got some feedback, acted on it and made the world a better place. Right. Do you have any examples?

Yeah, so I mean we have dozens that are probably available on our website. But one that comes to mind because I know the company relatively well is a third party logistics company called nfi. Now this is far from a household name.

I know one. Let me stop you. We actually have video from an NFI factory in California Medic on our website. We went there several years ago and did a vert day practice.

Lean.

And I know NFI very well actually. Great.

So they're a partner of ours and have been for a couple years. They have 14,000 plus frontline teammates, 350 warehouses, very large, complex third party logistics operation who they are very passionate about being an employer of choice in a company where frontline workers can find success. As they began investing in our software platform, they saw both short term obvious opportunities and long term obvious opportunities. For example, they were running these orientation programs across the country where new employees were meant to follow a sort of specific journey that would get them set up for success at nfi. And by tying feedback data to outcome data at scale, what they could see very quickly is that there were certain buildings within that network that just were not following the process, where a worker's average worker satisfaction with onboarding might be 95%, but in a specific building it might be 55%. So that's a very easy way to start to identify. Okay, here are some very clear opportunity areas where it's hard at a scale of 350, to just intuit this. But now we can see, based on the data, there are some places where we can lean into ensuring that best practices are being followed at all of our locations. Then over time, what they've been able to see is, okay, here is what is driving turnover in our transportation group.

Right?

Here's what's driving turnover in our warehousing group. Here is what's driving turnover in this specific building. So that rather than sort of attacking opportunities like this is the one thing that we work on as a company, it's very clear that this is the number one thing we should be working on in DeSoto, Texas, and here's the number one thing we should be working on at the facility visit in California. And by doing that and by getting leadership at every level engaged with that process, they've been able to see 18% overall reduction in turnover, which at that sort of scale is very, very, very meaningful. It's thousands less hires per year they need to make in a very competitive labor market.

Yeah, very cool. Yeah. The facility that I went to is in Chino Hills. I think I'm saying that. Right. C H I N O Hills, California. Chino Hills, Yeah. So really, it's interesting that, you know, they. They're very, really prolific in their practice of lean. So makes sense that they're. They would be interested in your product, you know, and trying to have a better workplace. Right. So that's a small.

Have you spent much time in the Inland Empire, that Chino area?

No, no, no. I mean, I just visited there for that one time and this was years ago when we went there, but got it.

Well, that's, as you probably know, sort of the warehousing and distribution mecca. That's sort of. It's called the Inland Empire, Inland from the LA port. So sort of far enough away to get very large warehouses and a relatively reasonable cost of labor, but close enough that goods can be brought from the ports relatively quickly. So.

Got it.

Chino, Ontario, Riverside, San Bernard. Like that whole area, just massive distribution operation after massive distribution operation. It's a pretty, pretty surreal place. To drive around.

Got it. I remember, I remember we were in there filming our. Or none of our microphones are working. Right. So, yes, so many radios going in the radio frequency going. And our wireless mic system wouldn't work. Right. I remember that. But yeah, we got it done, man. So, yeah, I'll put a link in there so folks can go check that out and I'll send you a link as well. Dan, you can go, you can watch, check it out. But yeah, it's. It's an old series, but they, they were really getting after it back in the day and I, and I know they still are, so. Well, good. Well, hey, I'm wondering maybe, Dan, just to kind of wrap things up, I, I'm wondering if maybe you have some advice for, you know, the leader who's working right now and no matter, no matter their industry, I mean, we might have a doctor and a nurse listening right now, you know, trying to figure out how to, you know, have a, have a better healthcare environment. You know, like, do you have any, like, meta advice for, for folks on how to, how to be better at leading people and encouraging and motivating people and fostering an awesome workplace?

Yeah. I think you're right to point out that while we build software specifically for the supply chain vertical, this problem of, you know, how do you engage with, motivate, and ultimately retain teammates within your organization, whether that's a technology company, a hospital, or a nonprofit, we're all just people, right? Like, we generally want the same things. We want to have physical safety. We want to have compensation that feels just and allows us to meet the needs economically, ourselves and our family. We want to understand the work we're doing contributes to something bigger. And we want to see pathways to growth, whatever that means for an individual. Right. So you're right that this is not a supply chain problem, it's a human problem. Right. And, you know, really this process that we've been discussing, again, not too dissimilar from, from lean principles, it's really just applying that scientific method to workforce engagement and retention, which is to say you collect feedback so as to sort of build a thesis as to how you can be a better leader for your team or teams. Then you create a test, right? Which is basically like you make some sort of change in your organization. I think people think about pay a lot, but it could be weekly one on ones. It could be career growth pathways, it could be updating a certain set of tools. It could be anything that applies to that thesis. And then you measure, right? You need to be able to understand, okay, we made this change based on this feedback. What was the response? Did our workforce sentiment improve as it relates to that topic? Did our retention improve over time in any of our sort of core workforce cohorts? And then you go back around to the start, right? And then you're collecting continuous feedback, you're creating another thesis, you're creating another initiative or test, and you're measuring the outcomes. And that approach to improving workforce retention and really, honestly just improving the employer brand can be applied to almost anything. Right. Because it works.

Yeah. Well, within Lean, we call it pdca Plan, do, check, act, you know, so you make a plan, you do something, you check it, you act or you adjust, you know, and it's circular, it's iterative if you just keep going. Right. And so, hey, do you guys offer like a trial or anything like that with your product or how does that work? If folks want to check it out.

Yeah, if folks want to check us out. You can find workstep@workstep.com if anybody super curious, they can also just email me directly at Dan at Workstep, typically we design a pilot of some sort for new companies where, where we allow them to really see and feel the value of the solution so they can understand, you know, the value that can be delivered to the company overall by leveraging this sort of retention management platform.

Got it, got it. Very good. Well, we'll put a link in the, in the show notes. So this is episode 421. So just go to gimba podcast.com, look for episode 421 and we'll, we'll link it all up here. And, and Dan, I assume you're on LinkedIn and all that kind of good stuff.

Yep.

Awesome. Awesome. All right, man. Well, hey, I appreciate you coming on and keep up the great work and I enjoy chatting.

Thanks a lot, Ron. I appreciate the conversation.

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